Is There Any Safe Money in the Bitcoin Bubble?

February 11, 2021
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Investors at all levels have taken more interest in Bitcoin this year, spurred by soaring prices and some high-profile news stories. Tesla (NASDAQ: TSLA) is one of the few major companies to make a bet on Bitcoin, moving around 8% of its cash reserves into the cryptocurrency earlier this week. Tesla’s investment of $1.5 billion sent Bitcoin soaring, but top economists still aren’t convinced of the long-term viability.

Bitcoin is still an incredibly risky investment for the average person, and these are the reasons why.

Bitcoin Has no Fundamental Value

Unlike traditional currencies, Bitcoin has no fundamental underlying value. It is an entirely speculative investment with the only value being that which investors attribute to it. It is far from being widely accepted as a currency and some economists are reluctant to even call it one.

With no inherent value backing it, it carries total risk. While many have seen their investments grow, it’s entirely feasible that a bubble-burst or complete crash of the Bitcoin market could lead to a total loss of investment. Those who go a step further and borrow to buy cryptocurrency can face an infinite amount of risk.

Bitcoin Can’t be Scaled

Regardless of what proponents of the cryptocurrency say, Bitcoin will never be a viable currency for the masses. transactions are processed at a rate of around 1,800 transactions in ten-minute intervals. This figure isn’t scalable.

Compare this to Visa, a leading digital payments company backed by real currencies, which processes and verifies 1,700 transactions every second, and it’s easy to see the shortfall of Bitcoin.

Is it Worth Investing in Cryptocurrency Today?

In a period from 2017 to 2018, Bitcoin climbed to $20,000 per coin and came crashing back to earth at $3,000 per coin. There has been volatility since that time, and there’s nothing to suggest that there’s any safe money in Bitcoin investment.

The lack of any fundamental value, little regulatory support, and the technical limitations and blockchain are impossible to ignore. Cryptocurrencies are big in the news today, but investors who want to avoid unnecessary risk are likely to do better with traditional equities and investment products where the fundamentals are tangible.

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